CFO | Broad support for charity commission

Interim-commissioner Susan Pascoe’s track record, including as the Victorian Bushfires Royal Commissioner, has helped the Charities Commission win support – despite ongoing concerns.
Photo: John Woudstra

by
Sally Rose

“I feel a bit like I’ve been sitting in the back seat of the car with my two brothers for hours arguing over what the rules of the game will be once we get to the beach, when the truth is we all know when we get there we’ll just start splashing around in the water and everyone will have a good time."

That’s how Community Council of Australia chief executive officer David Crosbie described his state of mind this afternoon as he emerged from an hour and a half of giving evidence to both the Parliamentary Joint Committee on Corporations and Financial Services and the Senate Committee on Community Affairs Legislation hearings.

Both committees have a tight turnaround time to consider the Australian Charities and Not-for-Profit Commission (ACNC) Consequential and Transitional Bill after the Economic House Committee referred the second draft to them on August 23.

Submissions to both committees closed on August 30 with the Parliamentary Joint Committee due to report to Parliament on September 10 and the Senate Committee on September 12. The bill is due to be voted on during a joint sitting of Parliament running from September 10 to 20. If passed the new regulator will take effect from October 1.

Like most spokesmen from the non-profit sector Crosbie wants to see the legislation passed, even if he still has concerns about its imperfections.

“The ACNC bill will be enabling legislation not operational legislation," he says. “The priority is to get the commission operational and then hold it accountable for the reforms it has been charged with."

Eleven recommendations have already been accepted to improve the bill.

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Accounting body CPA Australia has made written submissions to committees. It supports the bill but asked for the start date for non-profits to report to the ACNC be delayed 12 months from June 30, 2014 to June 30, 2015.

This request has been made because the period of comparison for the scheduled start date already began on July 1. CPA Australia has not asked to delay lodgement of an annual income statement.

A concession has already been made to delay the start period for the new reporting framework till July 1, 2013. A spokesperson for the federal Assistant Treasurer said the new reporting framework will be phased in “to ensure close consultation and engagement can take place".

“While better than nothing, the reprieve is not long enough," says The Institute of Chartered Accountants in Australia head of reporting Kerry Hicks.

Entities are required to provide comparative reporting, so the period of comparison backdates to July 1, 2012. “If the ACNC will be recommending NFPs start reporting differently or using different standards then they should already be using them," says Hicks.

CPA Australia has also suggested a plan B. “If the date for reporting can’t be delayed then at least delay the need to provide a comparative period," says the body’s senior policy advisor external reporting Mark Shying.

Introducing this Commonwealth legislation without any change to the state’s rules on NFP reporting would mean doubling up on annual reports and audits.

It has been suggested the ACNC accept financial reports prepared for state-based regulators for an interim period of up to one year. But some are concerned the Council of Australian Governments will take longer than that to harmonise the rules.

“Another concern with the legislation is that it is not drafted in plain language," says Juanita Pope, director of PILCHConnect. Her organisation is a specialist service for non-profits within the Public-Interest Law Clearing House (Vic). It deals with grassroots, volunteer-reliant charities.

Pope “seriously doubts that the average volunteer committee member will realise that when the act refers to ‘a responsible entity of registered entity’ it means them".

The non-profit sector “has to take it on trust that this and future governments will consult with the sector on governance and external conduct standards", says Pope.

It would be better if there was something in the legislation to ensure the sector will be consulted in the future. Nevertheless, “on balance, it is better to get the commission up and running", she says.

“Every interaction with the ACNC taskforce as led by Susan Pascoe has consistently assured us that their approach to regulation of the sector will be appropriate," says Pope.

Despite widespread support from the sector to see the bill passed, it is at real risk of not getting through Parliament next week.

The Coalition has indicated it will not support the bill in its current form, arguing the lack of clear governance and reporting frameworks mean the ACNC could fail in one of its key goals: to reduce the regulatory compliance burden on non-profits.

If the ACNC is to become the new regulator from October 1 as planned, winning support from the Australian Greens will be essential.